Norwich Union warned this week it will refuse to insure new homes put up on inadequately-protected floodplains, blocking buyers from obtaining a mortgage and calling into question key regeneration schemes such as John Prescott's Thames Gateway project.

The insurer, which covers one in every five homes in Britain, is close to completing a new flood map of Britain developed using technology which singles out homes prone to flooding with precision not seen before.

Until now insurers have used postcodes (which cover 20-30 homes) to assess flood risk but the new map will identify the exact position of each home and its height above sea level.

Around 2m homes are in flood-prone areas such as Boscastle, devastated by a flash flood this week. The new map will identify those in line for sharp increases in premiums and excess levels, and those which may deserve a cut in charges.

A typical home insurance policy has an "excess", meaning that the householder pays the first £50 of any claim. But in areas defined as "high risk" - which Norwich Union says is where a flood happens more than once in 75 years - the excess could rise to £1,000 or more. It has given a guarantee to existing customers it will not pull out of providing cover, but where it is approached by new customers, particularly for new-build homes on floodplains, it is likely to refuse. Jill Boulton, head of Norwich Union's flood mapping project, says: "Where we find that a developer has not thought properly about flood protection, it's leaving their buyers and us in a very difficult position. In such situations we are not prepared to offer cover."

The Office of Deputy Prime Minister is keen to press ahead with 90,000 new homes in the Thames Gateway area stretching along the estuary to the Essex and Kent coast. But, as currently proposed, most of the area is already below existing high-tide level, and well below the likely flood level of 2050.

NU's Ms Boulton says: "We appreciate the need to build new homes, but if they absolutely have to be built on floodplains, then it needs to be extremely carefully looked at. Concreting over fields for development is a key factor behind flash flooding."

NU wants new-build homes to be more flood-resilient - which means electrical circuits and plug sockets located at knee rather than ankle level, and kitchen units put on three-inch spikes and made of wood rather than chipboard. Flood damaged homes can take up to a year to dry out, and the pollutants and bacteria in flood water means that plasterwork has to be stripped back to the bricks.

NU acknowledges that the government has increased spending on defences, but Ms Boulton says that her inspection of recent work indicates that "the defences built in 1100 and 1600 are still there, but the modern ones are already rotting".

She adds that water company drainage problems have also worsened and that billions may have to be spent to replace pipes.

In October, the Environment Agency will release a new, highly-detailed flood map of Britain, which, unlike the NU map, will be available online at environment-agency.gov.uk. It also runs a flood hotline on 0845 988 1188.

There is also some good news for people living in areas which are subject to regular flooding.

Lewes in East Sussex hit the headlines in 2000 when it suffered extensive flooding, and it remains vulnerable. Before the new mapping techniques, insurers were refusing to offer cover to one in 10 homes in the town.

But NU says it has been able to narrow that down to just 2%, because it can identify precise risk to each and every home in the area.